Arena Blog

Bringing a hardware renaissance to Silicon Valley

As the name implies, Silicon Valley is home to a vast number of software startups. From giants like Facebook and Google in the South Bay to Twitter, Zynga and Salesforce in San Francisco, it feels like there’s a new app, social network or cloud tool emerging every day. And at times, it can be easy for hardware innovators to feel left out.

But while software startups outnumber hardware startups in the Valley, new technologies are opening the door for the next hardware startup renaissance. We are already seeing a resurgence in hardware—just look at the popularity of Maker Faire and the emergence of international hardware accelerator programs like HAXLR8R.

I recently met with Ian McCullough, startup expert and co-founder of Giant Cardboard Robots, to discuss how new developments can help hardware startups design and manufacture products better and faster, and compete for the spotlight in the Bay Area startup scene.

Why so much silicon in Silicon Valley?

Ever since the introduction of the IBM PC in the early 1980s, software has dominated the Valley. Even today, 8 of the top 12 most valuable startups in the world are based in the Valley, and only one of these companies (Square) manufacturers hardware. These top valued companies include Realtime, Spotify, Gilt Groupe, Evernote, Box, Airbnb, Fanatics, Workday, Palantir Technologies, Square, Dropbox and Twitter.

Although there are fewer hardware startups in the Valley, it’s not to say that hardware is unprofitable—far from it. Arena customers like GoPro, Fitbit, Lytro and Liquid Robotics are proof that there is plenty of room for innovation in the hardware world. And while hardware startups may face more challenges in getting off the ground due to factors like VC funding decisions, higher barriers to entry and higher costs associated with going to market, hardware innovation is alive and well.

Technology is the key for hardware growth

It's often easier for software startups to get off the ground because they can avoid the time-intensive, operational challenges of getting a hardware product to market. But with new tools (like Arena PDXViewer and Arena PartsList) and technologies (like 3D printing), hardware startups may be able to reduce the amount of time and labor that goes into developing a hardware product and bringing it to market.

Arena PDXViewer, for example, is a tool we’ve developed to make it easy to view, share and filter PDX build packages with the supply chain. By using a tool to communicate build package data with suppliers, manufacturers and suppliers can reduce instances of miscommunications, identify efficiencies and hasten time to market.

Manufacturing obstacles like sourcing the right materials and optimizing shipping logistics are other areas where technology can introduce a better standard operating procedure. The process of building a prototype, for exmaple, may fundamentally evolve as more manufacturers adopt technologies like 3D printing. Imagine if you could simply print a part and assemble a hardware prototype entirely in-house. When time is money, tools like 3D printing can increase hardware competitiveness and innovation.

What do you think?

Here’s my question to you—how can we encourage more hardware startup innovation in the Valley and around the world? What barriers need to be eliminated so that hardware startups become as abundant as their software startup friends? Is there a downside to changing the status quo?